IDEAS home Printed from https://ideas.repec.org/a/sae/jothpo/v17y2005i1p75-105.html
   My bibliography  Save this article

The Perverse Effect of Spending Caps

Author

Listed:
  • Søren Serritzlew

    (Department of Political Science at University of Aarhus, soren@ps.au.dk)

Abstract

Spending caps have become popular as a means to curb public expenditure. But the effect of spending caps is unsettled both theoretically and empirically. The most thorough treatment of the issue is provided by Ferejohn and Krehbiel, who argue that it is necessary to take preferences of politicians into account when analyzing the effect of spending caps. They conclude that spending caps may have both desirable and perverse effects, i.e. lead to lower and higher spending. Unfortunately Ferejohn and Krehbiel’s model has never been tested and it is not clear how it fares theoretically in systems with more than two issues. This article makes two contributions. First, it generalizes Ferejohn and Krehbiel’s model to cover systems with as many issues as in real world budgeting. Second, it provides an empirical test of this model. To avoid problems of measurement and endogeneity, the test is conducted as an experiment. It confirms the general model, supporting the claim that spending caps have predictable but counter-intuitive effects on spending.

Suggested Citation

  • Søren Serritzlew, 2005. "The Perverse Effect of Spending Caps," Journal of Theoretical Politics, , vol. 17(1), pages 75-105, January.
    • Handle: RePEc:sae:jothpo:v:17:y:2005:i:1:p:75-105
    DOI: 10.1177/0951629805047799
    as

    Download full text from publisher

    File URL: https://journals.sagepub.com/doi/10.1177/0951629805047799
    Download Restriction: no
    File URL: https://libkey.io/10.1177/0951629805047799?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    References listed on IDEAS

    as
    1. Kenneth Shepsle & Barry Weingast, 1981. "Structure-induced equilibrium and legislative choice," Public Choice, Springer, vol. 37(3), pages 503-519, January.
    2. Terje P. Hagen & Rune J. Sørensen & Øyvind Norli, 1996. "Bargaining Strength in Budgetary Processes," Journal of Theoretical Politics, , vol. 8(1), pages 41-63, January.
    3. Daniel Kahneman & Amos Tversky, 2013. "Prospect Theory: An Analysis of Decision Under Risk," World Scientific Book Chapters, in: Leonard C MacLean & William T Ziemba (ed.), HANDBOOK OF THE FUNDAMENTALS OF FINANCIAL DECISION MAKING Part I, chapter 6, pages 99-127, World Scientific Publishing Co. Pte. Ltd..
    4. James Enelow & Melvin Hinisch, 1983. "On Plott's pairwise symmetry condition for majority rule equilibrium," Public Choice, Springer, vol. 40(3), pages 317-321, January.
    5. Molander, Per, 2001. "Budgeting Procedures and Democratic Ideals: An Evaluation of Swedish Reforms," Journal of Public Policy, Cambridge University Press, vol. 21(1), pages 23-52, January.
    6. Fiorina, Morris P. & Plott, Charles R., 1978. "Committee Decisions under Majority Rule: An Experimental Study," American Political Science Review, Cambridge University Press, vol. 72(2), pages 575-598, June.
    7. McKelvey, Richard D., 1976. "Intransitivities in multidimensional voting models and some implications for agenda control," Journal of Economic Theory, Elsevier, vol. 12(3), pages 472-482, June.
    Full references (including those not matched with items on IDEAS)

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Kenneth Shepsle, 1986. "The positive theory of legislative institutions: an enrichment of social choice and spatial models," Public Choice, Springer, vol. 50(1), pages 135-178, January.
    2. Thomas Bräuninger, 2007. "Stability in Spatial Voting Games with Restricted Preference Maximizing," Journal of Theoretical Politics, , vol. 19(2), pages 173-191, April.
    3. Cheryl L. Eavey & Gary J. Miller, 1995. "Subcommittee Agenda Control," Journal of Theoretical Politics, , vol. 7(2), pages 125-156, April.
    4. Kenneth Koford, 1982. "Why so much stability? An optimistic view of the possibility of rational legislative decisionmaking," Public Choice, Springer, vol. 38(1), pages 3-19, March.
    5. Roger D. Congleton, 2018. "Intellectual foundations of public choice, the forest from the trees," Public Choice, Springer, vol. 175(3), pages 229-244, June.
    6. Jan Sauermann, 2020. "On the instability of majority decision-making: testing the implications of the ‘chaos theorems’ in a laboratory experiment," Theory and Decision, Springer, vol. 88(4), pages 505-526, May.
    7. Schnellenbach, Jan & Schubert, Christian, 2015. "Behavioral political economy: A survey," European Journal of Political Economy, Elsevier, vol. 40(PB), pages 395-417.
    8. de Groot Ruiz, Adrian & Ramer, Roald & Schram, Arthur, 2016. "Formal versus informal legislative bargaining," Games and Economic Behavior, Elsevier, vol. 96(C), pages 1-17.
    9. John Jackson, 2014. "Location, location, location: the Davis-Hinich model of electoral competition," Public Choice, Springer, vol. 159(1), pages 197-218, April.
    10. Kenneth Koford, 1982. "Centralized vote-trading," Public Choice, Springer, vol. 39(2), pages 245-268, January.
    11. Cesar Garcia Perez de Leon, 2012. "Does implicit voting matter? Coalitional bargaining in the EU legislative process," European Union Politics, , vol. 13(4), pages 513-534, December.
    12. Matthew D. Mitchell, 2019. "Uncontestable favoritism," Public Choice, Springer, vol. 181(1), pages 167-190, October.
    13. Nicholas R. Miller, 2015. "The spatial model of social choice and voting," Chapters, in: Jac C. Heckelman & Nicholas R. Miller (ed.), Handbook of Social Choice and Voting, chapter 10, pages 163-181, Edward Elgar Publishing.
    14. Stanley L. Winer & Walter Hettich, 2002. "The Political Economy of Taxation: Positive and Normative Analysis when Collective Choice Matters," Carleton Economic Papers 02-11, Carleton University, Department of Economics, revised 2004.
    15. Sauermann, Jan & Schwaninger, Manuel & Kittel, Bernhard, 2022. "Making and breaking coalitions: Strategic sophistication and prosociality in majority decisions," European Journal of Political Economy, Elsevier, vol. 71(C).
    16. Peter Kurrild-Klitgaard, 2014. "Empirical social choice: an introduction," Public Choice, Springer, vol. 158(3), pages 297-310, March.
    17. Tovey, Craig A., 2010. "The instability of instability of centered distributions," Mathematical Social Sciences, Elsevier, vol. 59(1), pages 53-73, January.
    18. Roger D. Congleton & Yang Zhou, 2019. "A test of the institutionally-induced equilibrium hypothesis: on the limited fiscal impact of two celebrity governors," Economics of Governance, Springer, vol. 20(2), pages 103-128, June.
    19. Nels Christiansen & John H. Kagel, 2019. "Reference point effects in legislative bargaining: experimental evidence," Experimental Economics, Springer;Economic Science Association, vol. 22(3), pages 735-752, September.
    20. P. Hägg, 1997. "Theories on the Economics of Regulation: A Survey of the Literature from a European Perspective," European Journal of Law and Economics, Springer, vol. 4(4), pages 337-370, December.

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:sae:jothpo:v:17:y:2005:i:1:p:75-105. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: SAGE Publications (email available below). General contact details of provider: .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.